NC 401(k) Participants Will Reap Savings from
Recordkeeper Change

By beating out six competitors including BB&T –
which has had the account since 1985 – Prudential won the
right to administer $2.3 billion in state retirement
assets, according to a Raleigh News & Observer report.
The Winston-Salem based BB&T said it would have to
slash about 40 jobs at its Raleigh trust division as a
result of the significant business loss.

“We are deeply disappointed that [the state treasurer]
has chosen to go out of state” for a plan administrator,
BB&T spokesman Bob Denham told the newspaper. BB&T
said it hopes to find other positions within the bank for
the displaced workers before September, when Prudential
begins administering the plan

The change will also mean less out of pocket expenses
for the plan’s 175,000 participants. Currently,
participants are required to pay annual fees to BB&T
based on the amount of money they keep in their accounts.
Prudential has promised to waive all account fees,
resulting in $22.3 million in particpant savings over the
next five years.

The state treasurer’s office, which organized the
bidding, told the newspaper Prudential was chosen
because it promised the highest level of service and the
lowest fees among the seven competitors. However,
Prudential’s large size may have given the company an
advantage, Denham said. With $580 billion in assets under
management, Prudential has the financial muscle to undercut
its competitors on price, he said. “The pricing was
cutthroat,” Denham told the News & Observer. “In our
view, we could not have gone any lower without losing
money” on the contract.

Prudential will also offer state employees guidance on
how to allocate their 401(k) funds through a program called
GoalMaker. The program lists a recommended mix of mutual
funds based on a person’s age, family size and future
retirement plans. BB&T did not have such an option,
state officials said.